2 FTSE 250 stocks that could be about to pop!

Andrew Woods explains why he thinks the share prices of these two FTSE 250 stocks could rise in the near future and why he’d buy them.

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While the FTSE 100 contains the biggest companies, FTSE 250 constituents also have the potential to provide serious growth over the long term. Having searched through the latter index, I’ve found two companies that I think could be great additions to my portfolio. Let’s take a closer look.

Time to invest?

First, Watches of Switzerland Group (LSE:WOSG) shares have not moved all that much compared to the wider market. In the past three months, they’re down 7%. At the time of writing, they’re trading at 869.5p.

For the 12 months to 1 May, the luxury watch retailer produced sparkling results. In that time, pre-tax profit surged 98%, coming in at £126m. Additionally, revenue grew by 40%.

This is an indication that there’s more traffic moving through stores. It’s also a sign that demand is beginning to increase again as the world continues to emerge from pandemic shutdowns. This could soon lead to a rising share price.

However, there’s the real possibility that a recession may be on the way. This could be bad news for the firm, given that the retail sector usually gets hit hard during a recession. Demand for luxury items may decline as less-affluent-but-aspirational shoppers are forced to rein-in their spending.

Despite this, Shore Capital issued a ‘buy’ rating for the stock, citing its quality and historical relationships with luxury watch brands. It placed a price target of 1,200p on the shares, which is still significantly higher than the current share price. 

Steely determination

Second, Ferrexpo (LSE:FXPO) has seen its share price moving in every direction over recent months. Currently, the shares are trading at 161p, having been above 300p this time last year.

It’s clear that the firm – an iron ore pellet producer based in Ukraine – has been badly impacted by the ongoing conflict. 

For the six months to 30 June, revenue fell by 31%. In addition, pre-tax profit declined by 88%, coming in at $82m. While this may seem disappointing, it’s worth noting that the company is still managing to post a profit, despite the war.

Furthermore, the business has cash of $172m and little debt. This suggests that it could manage its way through any continued difficulties in the short term. 

Ferrexpo is also planning the implementation of its Wave 1 Expansion Project. This could yield around 3m additional tonnes of iron ore pellets per annum. And while the conflict is continuing to make it difficult to export, the company is achieving more exports from ports and by rail into Europe. 

Overall, these two businesses have faced difficulties in the recent past. However, both are trading at low levels and may be positioned to grow in the long term. This could lead to climbing share prices in the near future. To that end, I’ll add both businesses to my portfolio soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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